Vladimir Putin’s stepping up the search for friends and finance in Asia in an effort to drag Russia out of recession amid the worst standoff with the U.S. and Europe since the Cold War.
Russia is keen to get money as Putin hosts a summit with leaders from the Association of Southeast Asian Nations, Yaroslav Lissovolik, chief economist at the Eurasian Development Bank, said by phone. ASEAN states have large current-account surpluses and reserves and there’s “considerable potential for using these resources in the Russian economy,” particularly in infrastructure development, he said.
With Russia in a second year of recession, its longest in two decades, following the crash in oil prices and U.S. and European sanctions over the Ukrainian conflict, Putin discussed trade with leaders from a succession of nations at the summit Thursday in the Black Sea resort of Sochi. He’s already forged stronger ties with China that include hundreds of billions of dollars in contracts signed by Russia’s biggest energy companies, Gazprom PJSC and Rosneft OJSC, and purchases of yuan-denominated bonds by the central bank last year.
The 10 ASEAN nations are “an enormous economic opportunity for Russia,” though current levels of cooperation are “fragmentary and insignificant,” with the exception of its partnership with Vietnam, Anton Tsvetov, a specialist in Southeast Asia at the Russian International Affairs Council, wrote in an article on the Carnegie Moscow Center’s website.
Russia’s ready to meet ASEAN members’ growing energy needs on a “long term basis,” and to take part in developing the region’s transport and information infrastructure, Putin said at a business forum at the summit on Friday. “In turn, we invite businessmen from ASEAN countries to participate” in developing Russia’s Far East, he said.
Investments and cooperation with ASEAN states are very important for Russia, though it isn’t making a strategic turn to the east because it’s a Eurasian power that can’t face in only one direction, Kremlin spokesman Dmitry Peskov told reporters Thursday. Russia won’t slow the pace of its cooperation with eastern countries even as it seeks cooperation to its west.
Russia isn’t looking to ASEAN countries only for cheap finance, Peskov said. Existing ties and investment “in such sensitive areas as military cooperation” mean there’s a basis for “long-term development of cooperation” while “sources of lending” will be diversified.
Putin and Indonesian President Joko Widodo agreed to expand defense cooperation including by joint ventures and technology transfers at talks on Wednesday before the summit. Indonesia needs “the most modern combat equipment” including ships, submarines, air-defense systems and armored vehicles, Alexander Fomin, general director of the Federal Service for Military and Technical Cooperation with foreign states, told reporters in Sochi.
“We would really like to work on Russian investments in Myanmar,” President Htin Kyaw told Putin at talks in Sochi Thursday. There’s “good potential” for economic and military cooperation, Putin said.
Malaysia and Russia can “significantly increase our trade,” Prime Minister Najib Razak told Putin at their meeting. He suggested signing a free-trade agreement between Malaysia and the Russian-led Eurasian Economic Union of five former Soviet states to boost investments.
Putin and the Sultan of Brunei discussed cooperation in processing hydrocarbons and the possible sale of Superjet 100 aircraft to the kingdom at their meeting, Peskov said. The sultan also invited Putin to visit his country, Peskov said.
While Russian weapons are “the hottest commodity” for Southeast Asian markets, there’s demand for oil, gas and nuclear energy projects, Tsvetov said. The U.S. and Europe remain higher foreign-policy priorities for the Kremlin, however, and “in the framework of Russia’s renewed activity in the east, Southeast Asia appears to be at best secondary to China,” he said.
Russia’s trade with Southeast Asian countries was only about $14 billion in 2015, down from $22 billion the year before, according to Peskov.
Prospects for partnerships between countries in the Eurasian Economic Union, ASEAN and the Shanghai Cooperation Organization will be discussed on Friday, Putin said at a reception for leaders at the summit on Thursday.
“We are ready to work together constructively in the interests of all of our countries and our peoples,” Putin said. “I have no doubt that we will succeed.”